Store Cards vs. No-Interest Credit Cards for 2016 and 2017
http://www.bestprepaiddebitcards.com – In this video, we discuss the pros and cons of store credit cards versus no-interest credit cards for 2016 and early 2017.
For the purposes of this video and the linked article, no-interest credit cards are those cards that are offering promotional rates of 0% for a set time for both purchases and balance transfers.
Although the focus is on comparing store cards special 0% financing against general purpose credit cards’ 0% promotional offers, if you have collected balances on some credit cards along the way and could use a breather from high-interest rates, this video is for you as well. All of the traditional cards mentioned in the video will allow you to transfer current credit card balances at 0% for 12 or 15 months. Transferring your balances to one of these cards can give you the pause time from high-interest charges to help pay down your debt faster.
Aside from special discounts and 0% financing, where store cards really shine is in their ability to help people build or rebuild their credit. Most store cards require lower credit scores to qualify than general purpose cards and can be a great tool for establishing or rebuilding credit. Credit limits are also typically lower than on general purpose cards, so you should definitely pay attention to how much you put on your store card as your goal should be to keep your debt to credit ratio below 30% for all cards.
Many store cards offer special 0% financing, such as Wal-Mart and Home Depot. Be sure to read the fine print, though. Many of these programs offer deferred interest for the set time period. For example, if you have 6 months at 0% on $500, but you only pay half of that by the deadline. All of the interest accrued since the date of purchase becomes due and is added to your balance of $250.
With a general purpose card, if you had the same scenario with 6 months 0% on $500 and you paid $250 over the six months, you would only owe interest on the balance going forward, or $250. The six months at 0% were just that: a chance to pay the balance off in six months with 0% interest.
Some general purpose cards to consider are the following: Chase Slate, Discover it Cashback Match and Wells Fargo Platinum Visa. These cards will require higher credit scores to qualify, but offer 0% on both purchases and balance transfers. So, you could get 0% not only on upcoming purchases for 12 or 15 months, but on any balances transferred as well. Chase Slate offers balance transfers with no balance transfer fee. The others use the standard 3% balance transfer fee.
One of our favorite tips is to determine how many months we should target for a reduced interest rate. If you are considering a shorter term promotional rate, take your total balance and divide it by the number of months at the promotional rate. For example, $6,000 for 12 months. You could pay that off in 12 months with monthly payments of $500. If you determine you need a smaller monthly bill, look for a card offering 15, 18 or 21 months or select a card with a low ongoing rate. If it is not doable on current offers, find the longest time period you can qualify for and pay on it the best you can during that time. With that in consideration, you will also want to look at the non-promotional rate, as that is the rate you will pay after the promo time period.
If you are interested in learning more, please check out the full article here:
You can also download a full list of balance transfer cards with 0% promotional offers in our PDF of the Best 0% Balance Transfer Cards.
Please ask us your questions in the comments below. If you already have experience with balance transfer cards, we would love to hear from you. Please let us know in the comments below your favorite balance transfer credit cards and your experience with transferring balances, whether good or bad. What cards do you recommend? If you have transferred balances multiple times, did you ever experience any problems along the way or any roadblocks. If so, were you able to resolve those roadblocks by calling the company directly?
We wish you the best in picking out the balance transfer card that works the best for you.